New Marriage Tax Penalty
When romance is in the air, and the proposal has been accepted, it is time to talk about the marriage tax penalty. While not romantic, it is a fact of life that a change in marital status can affect your tax bracket – sometimes for the better – sometimes for the worse. By speaking with a credible and knowledgeable CPA, you can prepare yourself for the future before it occurs.
Marriage Tax Mortgage Penalty
Marriage has always been a good way for some couples to pay less in taxes, but did you know that there is now a Marriage Tax Mortgage Penalty? If you are currently still single, but considering marriage before the end of the year, this is why you need to speak with a certified public account before tying the knot!
Thanks to the latest IRS rulings, unmarried couples can deduct twice as much of their mortgage and home interest on their tax returns. A California case with two men registered as domestic partners was the basis for this determination. Current tax codes allow for an interest deduction of up to $1.1 million. This breaks down to $1 million for a mortgage and $100,000 towards a home equity loan. The initial IRS ruling stated that they had to share the deductions, but after U.S. Court of Appeals for the Ninth Circuit made a reverse decision, the IRS acquiesced in the ruling allowing unmarried individuals to each deduct the full amount on their separate tax returns.
Choose Your Wedding Date Wisely
Although this is not an actual marriage tax penalty, getting married on December 31st is the same as getting married 11 months earlier as far as the IRS is concerned. If your combined incomes will push you into a higher tax bracket, you could wind up paying a lot more in taxes than if you had remained single until after the first of the year. This is why it is essential to speak with a CPA as part of your wedding plans. You want to ensure that you are doing everything possible to get started on the right foot.
Please contact Randee Abramson, your credible, professional, accessible CPA in Coral Springs and surrounding areas for answers to these and any end-of-the-year tax planning questions you have.